part a - part b

25 points The Krusty Krab is a monopoly that sets krabby pants at the bottom. The owner, Mr. Krabs, agreedy man who is considering tipong tay Mrs asked one of his employees, SpongeBob, to study the demand of krabby parties (Total 25 marks) A. SpongeBob's finding shows that the customers are very sensitive to the price. In particular, it the price goes up by 1%, the demand will decrease by 25%. Support marginal cost of making a krabby patty is $3. If Mr. Krabs decides to do a mark-up pricing, what will be the optimal markup? (4 marks) How much will Mr. Krabs charge for each krabby patty? (4 marks) B. Mr Krabe another employee, Squidward, has done some research as well. He finds that every customer has a different willingness to pay. The following table las come customers' willingness to pay Customer Patrick Sandy Plankton Mrs. Puff Mermaid Man Barnacle Boy WTP $7 54 $2 S3 $6 S5 With such information, what will be the best pricing strategy for Mr. Krabs? (4 marks) Assuming no fixed cost, what will be Mr. Krabs profit? (4 marks) What is second-degree price discrimination? (4 marks) Provide one example and explain how it works. (5 marks) For the toolbar press ALT F10 (PC) or ALT+FN.F10 (Mac). 25 points The Krusty Krab is a monopoly that sets krabby pants at the bottom. The owner, Mr. Krabs, agreedy man who is considering tipong tay Mrs asked one of his employees, SpongeBob, to study the demand of krabby parties (Total 25 marks) A. SpongeBob's finding shows that the customers are very sensitive to the price. In particular, it the price goes up by 1%, the demand will decrease by 25%. Support marginal cost of making a krabby patty is $3. If Mr. Krabs decides to do a mark-up pricing, what will be the optimal markup? (4 marks) How much will Mr. Krabs charge for each krabby patty? (4 marks) B. Mr Krabe another employee, Squidward, has done some research as well. He finds that every customer has a different willingness to pay. The following table las come customers' willingness to pay Customer Patrick Sandy Plankton Mrs. Puff Mermaid Man Barnacle Boy WTP $7 54 $2 S3 $6 S5 With such information, what will be the best pricing strategy for Mr. Krabs? (4 marks) Assuming no fixed cost, what will be Mr. Krabs profit? (4 marks) What is second-degree price discrimination? (4 marks) Provide one example and explain how it works. (5 marks) For the toolbar press ALT F10 (PC) or ALT+FN.F10 (Mac)